72t Annual Distribution Timing
I set up a SEPP plan with my Fidelity IRA last year and took the full annual payment in November 2018. I want to take the distribution now (in May) this year but Fidelity is stating that this is a “modification” of the plan and would delete the current SEPP plan and set up a “fixed amount periodic plan” in its place. Won’t that break the plan in the IRS’s view as well? How can they do this? My form I submitted to them indicated “annual” distribution with the first in November 2018 and last in November 2023 but nothing is specified for the years in between. Fidelity says this is inferred. Is there a PLR for this topic? Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2019-05-10 23:15
They are not only wrong, but have no authority to do anything but code your 1099R with early distribution code 1. But if you check your 2018 1099R they probably coded it 1 anyway. Just tell them that you are allowed to take your annual distribution in any year after the first year anytime you wish and can change your distribution pattern from year to year (eg annual, monthly, random etc). This is YOUR IRA account. Just take the distribution as you please this month, be sure not to take any other distributions this year, and be sure Fidelity knows that they are not to issue ANY Distributions automatically, only per your request. Again, all they can do is show Code 1 on the 1099R. You override that by filing Form 5329 and showing exception code 02 on line 2. Your plan is between you and the IRS and does not require the blessing of any IRA custodian.